What are the next steps with CAP from 2023 to 2027?

Agriculture Minister, Charlie McConalogue says the CAP must 'work well' for farmers with money ending up in farmers' pockets. Picture: Andy Gibson.

There is capacity to significantly reduce the maximum payment under CAP from €150,000 in the current CAP to as low as €66,000 in the next CAP, according to Agriculture Minister Charlie McConalogue.

He said his objective in CAP talks was to bring it to €60,000, and €66,000 was the level achieved.

However, the agreement at EU level allows member states to limit the amount of basic income support for sustainability that a farm can receive, to €100,000.

They may reduce the amount of this aid that exceeds €60,000, as much as 85%.

In this calculation, the case of agricultural holdings having several owners will be taken into account, and the ceiling will also be increased with labour costs, both for employed workers and for family labour or service companies, including social costs and the corresponding taxes.

These allowances are designed to provide for greater equity in the distribution of CAP support without penalising agricultural entrepreneurs who create jobs in rural areas and promote more labour-intensive crops.

The agreement 

The agreement provides for the possibility of using flat rates to estimate labour costs, in order to limit red tape.

Such matters - and much more - will be considered during the multi-stage development of Ireland's CAP strategic plan (CSP).

Its preparation will include a strengths, weaknesses, opportunities and threats analysis; a needs assessment; intervention design; financial allocations; target setting; and governance systems.

The draft CSP will be subject to an ex-ante evaluation, strategic environmental assessment, and appropriate assessment, including public consultation.

Minister McConalogue said recently he expected to shortly bring a memo to Government to launch a public consultation on the CAP Strategic Plan.

Consultations on the development of the CSP will continue via the CAP consultative committee, which comprises representatives of the main stakeholders including farm bodies, NGOs, industry representatives and academia. This committee has met on 18 occasions and further meetings are planned.

“It is important that we ensure that CAP works well for farmers, particularly on the eco schemes, and while these deliver additional benefits, it must ultimately be money that ends up in farmers' pockets. 

"That will certainly be a key objective of mine on framing the final plan and in working with everyone it has affected,” said Minister McConalogue.

“I will certainly be engaging now very comprehensively with farmers right across the country on the flexibilities that I delivered, and it is important that we have those flexibilities at national level so that farmers can participate in framing our national plan that works for our country and that they have a role in that.” 

Convergence

Internal convergence of payments will continue, with each entitlement value to reach at least 85% of the national average value no later than 2026.

In principle, no farmer can see their aid reduce by more than 30% but, in case of conflict, the 85% rule prevails over the 30% rule.

A mandatory redistribution of 10% of direct payments funding to small and medium-sized farmers is also provided for (CRISS, complementary redistribution of income support for sustainability), with a derogation for member states where they can demonstrate that their redistribution needs can be satisfied by other measures in Pillar 1.

Some member states such as France and Germany are already applying the CRISS. Now, all member states will have to implement it, unless they can demonstrate that they have achieved the desired redistribution objective by other means.

It consists of a supplementary payment for the first hectares financed with (at least) 10% of the national envelope provided for direct aid, but with ample room of manoeuvre for the member states.

For the first time, CAP conditionality will protect the rights of farm workers, mandatorily from 2025.

This will extend transparent and predictable working conditions, improved safety and health, for farm workers.

Environment 

The CAP has moved from an obligation of "crop diversification" to an obligation of “crop rotation”, although with escape routes such as catch crops or legume crops.

As a general rule, 4% of arable land has to be devoted to biodiversity, and all wetlands must be protected. Across the EU, the next CAP will require that hedges and trees cannot be cut during the birds’ breeding season.

The new CAP reserves 25% of the national envelope for direct aid to finance farmers’ environmental actions, through eco-schemes. They are a kind of agri-environmental measures, like GLAS, but without national co-financing.

Member states must propose them to farmers, but the participation of farmers is voluntary (but if they don’t participate, they risk losing 25% of their annual direct aid payment).

Each member state will have to define the eco-schemes that it considers pertinent in its national strategic plan.

Eco-schemes must be available for farmers in 2023. The budget available in 2023 and 2024 shall not fall below 20% of the national direct aid envelope, but the final percentage average of the five years must be 25%.

The eco-schemes are only broadly defined at this stage. They will be firmed up during preparation of and approval of national strategic plans, by the Commission, which has declared that it will be vigilant to ensure national strategic plans make a difference in attaining EU sustainability goals.

Strategic plans

Further reviews of strategic plans are planned in 2025 and 2027, accompanied if necessary by specific action plans for the member states judged to be falling behind.

The strategic plans of the member states must include a definition of active farmer, to whom CAP aid will be directed. This requires setting a minimum agricultural activity limit, and member states may approve a proposed list of entities automatically excluded. A proposed “genuine farmers” wording seems to have disappeared from the final agreement.

In any case, the diversity of situations in Europe has led the Commission to transfer the definition of the CAP beneficiaries to the member states. At European level, at least, multi-active or part-time farmers are not excluded.

The new mandatory minimum level of support for young farmers is set at 3% of national envelopes. In other words, it can be achieved with both first and second pillars support.

The new CAP also incorporates in its objectives other “new” farmers who will be eligible to benefit from second pillar support.

And for the first time, it includes among its objectives "gender equality and participation of women in agriculture", but there is no specific measure foreseen, other than member states having to incorporate this into their strategic plans.

There is no major change in coupled payments (of which protein crop payment is the only example in Ireland).

Member states are allowed to allocate to them a maximum of 13% of the direct aid envelope, and can add another 2% for protein crops.

Co-funding

Agriculture Minister McConalogue has said co-funding in Pillar 2 of the CAP will be very important, and he is engaging with his Government colleagues on this. 

“I will be doing everything I absolutely can to maximise this position. We also have the programme for Government commitment on the carbon tax which will be in addition to that.” 

Even as farmers are getting to grips with the new CAP from January 1, 2023, they will be expecting a new proposal for the post-2027 CAP, opening a new period of uncertainty.

Between now and 2023, CAP will stay in the news all the way, as member states must first approve and then present to the Commission their national strategic plans, before December 31 2021. 

These, in turn, must receive the approval of the Commission.

Once approved, the member state must approve the corresponding national regulations and ministerial orders and launch, where appropriate, the relevant calls.

It can be expected that direct aid continuity can be achieved without serious disturbances, but there will undoubtedly be delays in Pillar 2 rural development measures.